A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash,resulting in a loss of $3,000.The amount to be reported under cash flows from financing activities is:
A)$3,000 outflow.
B)$60,000 outflow.
C)$57,000 outflow.
D)Zero.This is an operating activity.
E)Zero.This is an investing activity.

Question

Quizplus · Accepted Answer

The cash flows from financing activities include all transactions involving the issuance or retirement of debt or equity instruments. In this case, the bonds with a carrying value of $57,000 were retired for $60,000 cash, resulting in a loss of $3,000. Therefore, the amount to be reported under cash flows from financing activities is a $60,000 outflow of cash.

A Company Reported That Its Bonds with a Par Value